Schakowsky's Deficit Plan Shows How to Get Things Done

Illinois Rep. Jan Schakowsky, a member of the President's deficit reduction commission, put out a straight-forward plan yesterday that demonstrates what you can do if you believe that we need a strong middle class to build a strong economy. Unlike the recommendations of the commission's chairs, Alan Simpson and Erskine Bowls, which would hurt growth and long-term recovery by cutting supports to the middle class and increasing the wealth gap, the Schakowsky plan is aimed at spurring economic growth and closing our growing inequality chasm.

Schakowsky's plan has three components: cutting the deficit, investing in growth immediately, and closing the long-term funding gap in Social Security. Taken together, the plan would help short-term recovery, reduce long-term budget shortfalls while encouraging growth, and assure that Social Security is in good shape for the foreseeable future.

Schakowsky would cut the deficit through a combination of actual cuts in waste and inefficiency, such as eliminating a program that helps McDonald's market overseas and introducing energy savings to federal employees' computer usage. It finds savings from elimination or reduction in 20 specific defense programs. It reduces the amount that the federal government pays for prescription drugs and includes a robust public option in health reform. It also cuts farm subsidies.

On the revenue side, she goes after corporate tax subsidies and wealthy individuals. Her biggest proposals would discourage corporations' over-reliance on highly leveraged financing and tax capital gains and dividends as ordinary income. She also includes raising revenues from cap and trade, with protections to help low-income consumers, which helps to reach another major policy goal: tackling climate change.

On Social Security, she firmly rejects proposals to cut benefits and instead proposes changes that would not only put the program on a firm financial footing for decades, but allow some benefits to be improved. She does this by raising the amount of income that is applied to Social Security and introducing a legacy tax on earnings above the cap, which would make the tax system a lot more progressive.

Finally, to help get the economy going now, Schakowsky's plan would invest in immediate job creation and protect against growth-killing cuts like shutting off unemployment compensation or federal funding to states for Medicaid.

Is her proposal dead on arrival with this deficit commission and Congress? Maybe so, but that's not the point. You can't win a debate with nothing. So next time someone says that we can't get out of this financial mess without "sacrifice," point to the Schakowsky plan and ask: Sacrifice for who? Here's a plan that will close the deficit by telling big corporations and the wealthy that it's time they pay their fair share. Plus, it will spur the economy, protect average taxpayers, keep Social Security's promise, and while we're at it, help prevent coastal cities from sinking into the ocean.

Time to take the offense. Let's run with that.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute and is writing a book on the progressive campaign to enact health reform.